Genesis Global Secures Court Approval for Liquidation Plan
Genesis Global, a cryptocurrency lender, won a significant victory in bankruptcy court on Friday. The court approved its liquidation plan, which will return about $3 billion in cash and cryptocurrency to its customers. However, this decision means that Digital Currency Group (DCG), Genesis’s owner, will not receive any recovery from the bankruptcy.
DCG’s Objection Overruled
U.S. Bankruptcy Judge Sean Lane overruled DCG’s objection to the plan. DCG argued that customer claims should be capped at the value of cryptocurrencies in January 2023, when Genesis filed for bankruptcy. Since then, crypto prices have surged, with Bitcoin rising from $21,084 in January 2023 to around $67,000 now. Judge Lane stated that even with the lower valuation, Genesis must prioritize paying other creditors. These creditors include federal and state financial regulators, who have claims totalling $32 billion, before distributing funds to its equity owner.
For more insights on cryptocurrency market trends, check out our article on current Bitcoin price trends.
Asset Shortfall for DCG Recovery
“There are nowhere near enough assets to provide any recovery to DCG in these cases,” Judge Lane wrote in his ruling.
Genesis plans to return funds to customers in cryptocurrency wherever possible. However, it does not have enough crypto assets to fully repay all claims.
Customer Claims and Valuation Debate
Sean O’Neal, an attorney representing Genesis, rejected DCG’s assertion that customers could be paid in full based on the lower January 2023 valuations. “We don’t believe claims are capped at the petition date value,” O’Neal stated.
In February, Genesis estimated it could repay up to 77% of the value of customer claims, depending on future fluctuations in cryptocurrency prices.
To understand more about how bankruptcy proceedings affect crypto lenders, visit our guide on crypto bankruptcy cases.
Significant Step Towards Resolution
The court’s approval marks a significant step forward in resolving Genesis’s bankruptcy. It provides much-needed relief to its customers but leaves DCG without any financial recovery.
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